Friday 19 January 2018

Surge sees semi-State aiming for State dividend of €40m

Fergal Leamy hopes for €60m to €65m operating cash flow
Fergal Leamy hopes for €60m to €65m operating cash flow
Colm Kelpie

Colm Kelpie

State forestry agency Coillte could be paying a dividend to the State of around €30m to €40m within three to four years, chief executive Fergal Leamy has said.

That would be a significant increase on the €6.2m paid for 2016, which was up 24pc on the previous year.

Mr Leamy said the money would come from the €60m operating cash flow the commercial semi-state is targeting by 2019.

"If I look at our plans to hit €60m to €65m of operating cash flow in the next three to four years, I think clearly it's a decision for any board at the time, but I'd be disappointed if we weren't paying a much greater dividend back to the shareholder," Mr Leamy told the Irish Independent, at the publication of the agency's annual results last week.

"If you think about the €60m to €65m, it's not unthinkable to say that you might be paying a €30m to €40m dividend to the State and then investing €20m to €30m in the business going forward."

Mr Leamy said the company had agreed a dividend policy with the State, and that it had committed to trying to grow that dividend each year.

"Historically, if you look at the dividends that Coillte would have paid, it would have borrowed the money to pay the dividend, and that is an unsustainable position.

"What I'm keen that we do is create this operating cash number that allows us to comfortably pay a decent dividend and then comfortably invest in areas of the business."

Annual results for the forestry agency, published last week, showed that operating cash flow surged 130pc to just over €15m.

It had set a target of €12m for last year.

It also reported record earnings of €98.3m for 2016, up 10pc on the previous year, while operating profit was just under €65m. Mr Leamy described the cash flow figure as the "most encouraging piece" of the annual results.

On Brexit, he said that even if there was a slowdown in the UK, Coillte would still be able to maintain its overall volume in part because of the recovery in the market here, and the ability to diversify into mainland Europe.

He also revealed that the agency is leading a drive for the industry to provide a plan for the sector in terms of trade post-Brexit.

"As an industry group, we're working very closely together on setting out what the rules of the trade would be in terms of logistics, in terms of country of origin, certification of product, all the boring stuff that needs to be in play, and keeping in mind what is required," he said.

"Luckily today the UK certification is the same, and there is no desire to move away from that.

"We've got agreement in principle with the industry, and then we will plan over the next few months to engage with different groups on that, in Brussels, London and here.

"There's going to be an awful lot to do for governments over the next while.

"And I think industry needs to take a lead in making it as easy as possible."

Irish Independent

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